Bullish components distributors expect double-digit revenue growth in China in 2011 according to Electronics Supply & Manufacturing-China survey

SHENZHEN, China, June 2, 2011 /PRNewswire-Asia/ -- Components distributors are positive about the China market, with 87% expecting double-digit revenue growth in 2011. On average, distributors in China forecast a 27% increase in revenue this year. This optimism is echoed by China's electronic manufacturers. This is part of the findings of the 11^th Annual Electronic Components Distributor Survey announced today by Electronics Supply & Manufacturing-China (ESM-China), an electronics management title of Global Sources' (NASDAQ: GSOL) joint venture subsidiary, eMedia Asia Limited.

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After a bumper year in 2010, which saw revenues of China's electronics and information industry increase by 24.1% year-on-year to RMB 6,364.5 billion (US$979 billion), China's electronic manufacturers continue to be optimistic, with 54% planning to increase their orders from components distributors this year in anticipation of continual growth.

Despite the surge in component demand, over 30% of China's franchise and combination distributors surveyed by ESM-China in December 2010 and January 2011 indicated that they had reduced delivery lead time, while over 50% said there was no change.  

Over half of components are sourced from distributors

The Survey found that on average, China's manufacturers purchased RMB210 million (US$32 million) worth of components in 2010, 54% of which were ordered directly from distributors.

A total of 147 senior managers working for leading components distributors in the China market and 1,629 corporate, purchasing and procurement managers from China's electronics manufacturers participated in this year's Survey, which looked into their current challenges and plans for the future.

In addition to component shortage, franchised and combination distributors are wrestling with fierce competition (54%), dropping profit margin (41%), rising costs (28%) and suppliers' changing channel management strategy (25%). To counter these challenges, they are developing new application markets (51%), developing new brands (38%), expanding sales network (31%) and increasing marketing activities (28%).

Aggressive competition is also the main challenge facing independent distributors, 37% of whom are looking to enhance their competitiveness by shifting to a combination business model. In fact, only 18% of distributors polled this year are independent distributors, compared with 24% in 2010.

Component quality is top priority for manufacturers

ESM-China Publisher, Brandon Smith, said: "The results show that components distributors are expected to continue enjoying business growth in China this year. One of the main objectives of our annual distributor survey is to give them a better understanding of what China manufacturers are looking for, so that they can adapt their business strategy accordingly."

Quality (66%) is China manufacturers' major issue when working with distributors, followed by prices and timely delivery. Using alternative components is a core strategy they adopt to overcome delivery and cost challenges. They are also optimizing their supply chain through signing supply agreements with suppliers, building up safety stock for key components, and expanding suppliers in their approved vendor list.

The most preferred distributors in China

The Survey also revealed the most preferred components distributors, as voted by managers of China's electronic manufacturers. Winners of each category are (in alphabetical order):

• Most Preferred Overseas Franchised Distributor: Arrow, Avnet, Cytech Technology, Excelpoint System (HK), Future Electronics, HK Baite (Group), Kei Kong Electronics, Weikeng International, Willas-Array and WPG Holdings.
• Most Preferred Local Franchised Distributor: Asiacom Technology, Burnon International, China Electronic Appliance Shenzhen, Comtech Communication Technology, Fengbao Electronic, Guangzhou ZLG-MCU, Honestar Electronics, Mornsun Electronics, Powertek Group and Secom Telecom.
• Most Preferred Independent Distributor: Advanced MP, America II, Compo Electronics, Mogultech International and PartMiner.
• Special Achievement Awards:
  • Catalog Distributors: Digi-Key, element 14, RS Components and Wuhan P&S;
  • Combination Distributors: Interine Electronics, North Technology, Pioneer Electronics and Vadas International;
  • High-growth: Mouser;
  • Outstanding Technical Support: Shenzhen Cestar.

For more information on the 11^th Annual Electronic Components Distributor Survey, please contact Jake Chen, Chief Analyst of ESM-China, at [email protected].

About Global Sources

Global Sources is a leading business-to-business media company and a primary facilitator of trade with Greater China. The core business uses English-language media to facilitate trade from Greater China to the world. The other business segment utilizes Chinese-language media to enable companies to sell to, and within Greater China.

The company provides sourcing information to volume buyers and integrated marketing services to suppliers. It helps a community of over 1 million active buyers – including the world's top 25 retailers – to source more profitably from complex overseas supply markets. With the goal of providing the most effective ways possible to advertise, market and sell, Global Sources enables suppliers to sell to hard-to-reach buyers in over 240 countries.

The company offers the most extensive range of media and export marketing services in the industries it serves. It delivers information on over 5.7 million products and more than 262,000 suppliers annually through 14 online marketplaces, 13 monthly print and 18 digital magazines, over 90 sourcing research reports and 73 specialized trade shows a year across nine cities.

Verified suppliers receive more than 127 million sales leads annually from buyers through Global Sources Online (http://www.globalsources.com) alone.

Global Sources has been facilitating global trade for 40 years. Global Sources' network covers about 60 cities worldwide. In mainland China, Global Sources has about 2,700 team members in more than 40 locations, and a community of over 2.8 million registered online users and magazine readers for its Chinese-language media.

About eMedia Asia Limited

eMedia Asia Limited is a joint venture between Global Sources (60.1%) and United Business Media (39.9%).

eMedia Asia provides 500,000-plus technology decision-makers throughout Asia and China with access to a multichannel media network. Through its technical events, publications and online network, eMedia Asia leads in providing the region's electronics community with the business and technical information they need to remain competitive.

SOURCE Global Sources